This morning Rafe linked to a piece by Jo Nova on the corona virus.
As a reader wrote to me yesterday: It’s not practical to close the borders. My reply: It’s not practical to kill 100,000 people either but one or the other may happen. Do the maths, WHO estimates 1% CFR (Case Fatality Rate. Let’s be optimistic, call it 0.5%. Deaths in the next six months: Australia, 125,000; Canada, 175,000; New Zealand, 25,000, USA, 1.6m; UK, 300,000. Geddit?
It wasn’t me – but let me repeat: it is not practical to close the borders, and it is expensive to do so too.
So here is the story about expense from the Cato Institute looking at the US.
Travel‐and‐immigration‐bans are expensive. The World Travel and Tourism Council estimated that tourism contributed about $1.595 trillion to U.S. GDP in 2018 and 18.8 percent, or about $299.86 billion, was from international travel. Also, blocking the roughly 500,000 immigrants who receive a green card abroad each year and those who enter on temporary work visas would also diminish their contributions to GDP. Looking at average salaries of immigrants as a decent proxy of their contribution to GDP, combined with the tourist spending, a travel‐and‐immigration‐ban would impose a cost of $323 billion to the U.S. economy in the first year.
The statistical value of a life in the United States, which is the average dollar value that individuals place on their own lives based on the risk‐money trade‐offs that they make, is about $10 million. Dividing the $323 billion cost of a travel and immigration ban for the first year by the $10 million statistical value of life reveals how many lives would have to be saved in the first year of such a ban so that the purely economic costs equal the benefits. Thus, a moratorium on travel and immigration would have to prevent 32,302 deaths to breakeven. This doesn’t include the cost of people being sick, which is most of COVID-19 cases, and the cost imposed on people outside of the United States as well as the long‐term costs to the U.S. economy such as lower growth and broken global supply chains.
So what is the problem?
Deaths and sickness aren’t the only costs imposed by COVID-19. Most of the negative impact would be due to people’s reactions and avoidance behaviors, according to a World Bank background paper on pandemics. As the author of that paper explained, “those costs created by behavioral changes to avoid infection would be aggravated by likely confusion triggered by incomplete or inaccurate information and other inadequacies in individual subjective risk assessments.” Healthy people changing their behavior to avoid becoming sick imposes another huge cost, similar to the cost that taxes impose by changing individual behavior. It’s important that healthy people adjust their behavior enough to reduce the cost of COVID-19, but not so much that the extra cost imposed by their changing behavior outweighs the potential damage done by the virus.
According to my Facebook feed people are stocking up on hand sanitiser, toilet paper, and bottled water. People are also avoiding Chinatown in Melbourne.
If you are elderly, and if you are immuno-compromised, there is need for (some) concern.
The fact that the Chinese authorities have responded poorly is a reflection of their authoritarian government.
The totalitarian government of China, where the coronavirus pandemic began, hid information and misled outside observers until it became impossible to.
To maintain the illusion of state omniscience, many more people both inside and outside of China will have died than otherwise, and immeasurable global economic damage inflicted as well. And it should be lost upon no one that the highly probably source of the coronavirus – eating what might best and most politely be referred to as exotic animals outside of normal human consumption – occurred in China, where over 150 million people are malnourished.
To paraphrase – be alert, don’t be alarmed. Well not unnecessarily alarmed.